Question 1

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Accepted Answer

A)   police services are more frequently used in poor neighborhoods.
B)   the wealthy benefit more from services provided by government than the poor.
C)   the poor are more active in political processes.
D)   the poor receive welfare payments.E) A) and B)
F) C) and D)

Question 2

Income taxes and property taxes generate the highest tax revenue for state and local governments.

Accepted Answer

A) True 
 B)False

Question 3

Vertical equity and horizontal equity are associated with

Accepted Answer

A)   the benefits principle of taxation.
B)   the ability-to-pay principle of taxation.
C)   taxes that have no deadweight losses.
D)   falling marginal tax rates.E) None of the above
F) B) and C)

Question 4

Table 12-6
The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income.
 
-Refer to Table 12-6. For this tax schedule, what is the average tax rate for an individual with $280,000 in taxable income?

Accepted Answer

A)   39.9%
B)   40.2%
C)   42.7%
D)   44.8%E) A) and B)
F) A) and C)

Question 5

Tax evasion is

Accepted Answer

A)   facilitated by legal deductions to taxable income.
B)   the same as tax avoidance.
C)   recommended by the American Accounting Association.
D)   illegal.E) None of the above
F) C) and D)

Question 6

Suppose a recent increase in federal gasoline taxes is estimated to cause a $150 million reduction in the total surplus (consumer plus producer surplus) in the gasoline market. If tax revenues increased by $100 million, what is the deadweight loss associated with the tax? As a result of the tax, 10,000 people sold their cars and started riding their bicycles to work. How much of the burden of the deadweight loss is incurred by the bicycle riders?

Accepted Answer

The direct deadweight loss is $50 millio...

Question 7

In 2009, the top 1 percent of income earners

Accepted Answer

A)   made about 13 percent of all income.
B)   paid about 22 percent of all taxes.
C)   made over 2.5 times the percentage of all income earned by the lowest quintile.
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 8

Table 12-1
 
-Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. What is the value of the surplus that accrues to all four skiers from their weekend trip?

Accepted Answer

A)   $75
B)   $105
C)   $185
D)   $215E) C) and D)
F) B) and D)

Question 9

When the marginal tax rate exceeds the average tax rate, the tax is

Accepted Answer

A)   proportional.
B)   regressive.
C)   non-egalitarian.
D)   progressive.E) B) and C)
F) A) and B)

Question 10

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Accepted Answer

A) True 
 B)False

Question 11

The share of federal government spending on healthcare has risen substantially over time. This is most likely a result of

Accepted Answer

A)   medical advances that provide new, better, but often more expensive medical treatments.
B)   a rising population of the elderly in the economy.
C)   health insurance reform that will include government subsidies for health insurance for many low-to- moderate income families.
D)   All of the above are important factors.E) B) and D)
F) B) and C)

Question 12

Table 12-10
 
-Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her average tax rate is

Accepted Answer

A)   18.5%.
B)   20.2%.
C)   21.8%.
D)   25.0%.E) A) and C)
F) B) and C)

Question 13

State and local governments receive the largest portion of their tax revenues from

Accepted Answer

A)   sales taxes and income taxes.
B)   income taxes and property taxes.
C)   payroll taxes and income taxes.
D)   property taxes and sales taxes.E) A) and B)
F) B) and D)

Question 14

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Accepted Answer

A)   25 percent
B)   34 percent
C)   50 percent
D)   75 percentE) All of the above
F) A) and D)

Question 15

A person's marginal tax rate equals

Accepted Answer

A)   her tax obligation divided by her average tax rate.
B)   the increase in taxes she would pay as a percentage of the rise in her income.
C)   her tax obligation divided by her income.
D)   the increase in taxes if her average tax rate were to rise by 1percent.E) C) and D)
F) B) and C)

Question 16

In 2011, what percentage of federal government receipts came from corporate income taxes?

Accepted Answer

A)   7%
B)   12%
C)   25%
D)   43%E) A) and B)
F) B) and D)

Question 17

Scenario 12-3
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice,$9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-3. How much consumer surplus does Regina receive from consuming her slice of cheesecake?

Accepted Answer

A)   $3
B)   $5
C)   $9 d
D)   . $12E) B) and D)
F) B) and C)

Question 18

Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Accepted Answer

The marginal tax rate would be 30 percen...

Question 19

Corporate income taxes are based on the amount of revenue a corporation earns.

Accepted Answer

A) True 
 B)False

Question 20

Resources devoted to complying with the tax laws are a type of deadweight loss.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System

A person's marginal tax rate equals

Correct Answer
verified

Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Correct Answer
verified
The marginal tax rate would be 30 percen...
View Answer

Correct Answer
verified
The direct deadweight loss is $50 millio...
View Answer

Table 12-10 -Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her average tax rate is

Correct Answer
verified

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Correct Answer
verified

Corporate income taxes are based on the amount of revenue a corporation earns.

Correct Answer
verified

In 2009, the top 1 percent of income earners

Correct Answer
verified

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the average tax rate for an individual with $280,000 in taxable income?

Correct Answer
verified

Vertical equity and horizontal equity are associated with

Correct Answer
verified

Table 12-1 -Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. What is the value of the surplus that accrues to all four skiers from their weekend trip?

Correct Answer
verified

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Correct Answer
verified

The share of federal government spending on healthcare has risen substantially over time. This is most likely a result of

Correct Answer
verified

State and local governments receive the largest portion of their tax revenues from

Correct Answer
verified

Income taxes and property taxes generate the highest tax revenue for state and local governments.

Correct Answer
verified

When the marginal tax rate exceeds the average tax rate, the tax is

Correct Answer
verified

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Correct Answer
verified

Resources devoted to complying with the tax laws are a type of deadweight loss.

Correct Answer
verified

Correct Answer
verified

Tax evasion is

Correct Answer
verified

In 2011, what percentage of federal government receipts came from corporate income taxes?

Correct Answer
verified

Exam 12: The Design of the Tax System

A person's marginal tax rate equals

Correct AnswerverifiedShow Answer

Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Correct AnswerverifiedThe marginal tax rate would be 30 percen...View AnswerShow Answer

Correct AnswerverifiedThe direct deadweight loss is $50 millio...View AnswerShow Answer

Table 12-10 -Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her average tax rate is

Correct AnswerverifiedShow Answer

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Correct AnswerverifiedShow Answer

Corporate income taxes are based on the amount of revenue a corporation earns.

Correct AnswerverifiedShow Answer

In 2009, the top 1 percent of income earners

Correct AnswerverifiedShow Answer

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the average tax rate for an individual with $280,000 in taxable income?

Correct AnswerverifiedShow Answer

Vertical equity and horizontal equity are associated with

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. What is the value of the surplus that accrues to all four skiers from their weekend trip?

Correct AnswerverifiedShow Answer

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Correct AnswerverifiedShow Answer

The share of federal government spending on healthcare has risen substantially over time. This is most likely a result of

Correct AnswerverifiedShow Answer

State and local governments receive the largest portion of their tax revenues from

Correct AnswerverifiedShow Answer

Income taxes and property taxes generate the highest tax revenue for state and local governments.

Correct AnswerverifiedShow Answer

When the marginal tax rate exceeds the average tax rate, the tax is

Correct AnswerverifiedShow Answer

Economics alone cannot determine the best way to balance the goals of efficiency and equity.

Correct AnswerverifiedShow Answer

Resources devoted to complying with the tax laws are a type of deadweight loss.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Tax evasion is

Correct AnswerverifiedShow Answer

In 2011, what percentage of federal government receipts came from corporate income taxes?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified
The marginal tax rate would be 30 percen...
View Answer

Correct Answer
verified
The direct deadweight loss is $50 millio...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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